What is Liquidation?

Liquidation: a crypto term, explained in plain English.

In one line

When an exchange force-closes a borrowed (leveraged) trade because the price moved against it and the trader's deposit can no longer cover the loss.

Crypto Drafted with AI help · Reviewed by Keshav Aggarwal · Updated 8 Nov 2026

In simple words

Imagine you want 10 stickers but pay for only 1 yourself. The shopkeeper lends you the rest and keeps your money as a promise. If sticker prices fall too much, the shopkeeper sells all 10 stickers early to get their money back, and your promise money is gone. That forced sale is a liquidation. It hits "longs" (bets that the price goes up) when prices fall, and "shorts" (bets that it goes down) when prices rise.

The technical side

In leveraged crypto trading (futures and perpetual swaps), a trader puts up margin and borrows the rest. If the price reaches the position's liquidation price, the exchange closes it and the margin is lost. On 5 November 2026, US tech and AI stocks sold off and Bitcoin fell about 6% to near $75,700. Over 24 hours CoinGlass counted about $1.08 billion of liquidations: $954 million of longs and $127 million of shorts, across 210,326 traders. DeFi lending protocols liquidate too: when a loan's collateral falls below the required level, it is sold to repay the loan. Follow the market mood on the Fear & Greed Index and derivatives on crypto options.

Liquidation kya hai?

Jab aap udhaar (leverage) lekar trade karte ho aur price ulta chala jaata hai, to exchange aapka trade zabardasti band kar deta hai. Saath mein aapka deposit bhi chala jaata hai. 5 Nov 2026 ko Bitcoin ~6% gira, aur 24 ghante mein $1 billion se zyada ke trades liquidate hue.

Not investment advice. Crypto tokens can lose all their value. Read the risk disclaimer.

Related terms

All terms, A to Z